The race to lead the United States Federal Reserve has reached a fever pitch as President Donald Trump prepares to announce a successor to Jerome Powell, whose term as Chair ends in May 2026. The decision comes at a critical moment for the world’s largest economy, with the central bank facing both political pressure and internal debate over the direction of interest rates. The stakes? Nothing less than the future of American monetary policy—and perhaps the global financial system.
According to BBC News, the President is expected to make his choice public in the coming weeks, capping off a high-stakes selection process that has drawn scrutiny from Wall Street, policymakers, and the broader public. Trump’s pick will need Senate confirmation, but the real test may come from the market’s reaction to the new Chair’s approach in a climate marked by robust growth and stubborn inflation.
This year’s economic backdrop has been nothing short of dramatic. On December 23, 2025, the Commerce Department reported that U.S. GDP grew at a 4.3% annualized rate in the third quarter—significantly outpacing Wall Street’s 3.2% forecast, as detailed by Investing.com. Consumer spending surged, bolstering the administration’s claims of an economic renaissance. Yet, core PCE inflation remained at 2.8%, above the Federal Reserve’s 2.0% target, tempering hopes for near-term rate cuts. Treasury yields climbed as investors weighed the President’s mounting pressure against the Fed’s traditional caution.
President Trump, never one to shy away from bold pronouncements, has made it clear that his next Fed Chair must pass a strict loyalty test. In a Truth Social post on December 23, he declared, “Anybody that disagrees with me will never be the Fed Chairman!” He continued, “I want my new Fed Chairman to lower Interest Rates if the Market is doing well, not destroy the Market for no reason whatsoever.” Trump’s public rebuke of the central bank’s habit of raising rates to preempt inflation reflects a fundamental shift from decades of economic orthodoxy. “Strong Markets, even phenomenal Markets, don’t cause Inflation, stupidity does!” he insisted, rejecting the notion that robust growth necessarily begets runaway prices.
His comments followed a Commerce Department report showing GDP growth at 4.2%—a figure the administration quickly touted as proof that Trump’s “America First” economic agenda is working. White House spokesman Kush Desai, speaking on X, was effusive: “Today’s blockbuster, expectation-smashing GDP report is the latest proof that President Trump’s America First trade and economic agenda continues to turn the page on the Biden economic disaster: American consumers are spending, and American exports are surging. President Trump built the greatest economy in the world in his first term, and he’s in the process of doing it all over again. Americans can count on benefiting from a historic economic boom in 2026.”
But not everyone is convinced that lowering rates is the right path forward. MarketWatch columnist Brett Arends argued in an opinion piece that Powell’s cautious approach has been vindicated. “If the president had gotten his way, inflation would surely be rocketing again, the economy would be overheating and the Fed would have to raise short-term rates again,” Arends wrote. He credited Powell’s steady hand with keeping inflation in check and the economy on an even keel, despite the President’s repeated calls for looser policy.
So, who are the frontrunners for the top job? The field is led by three men—each with their own strengths and liabilities.
Kevin Hassett, age 63, is perhaps the most closely aligned with Trump’s economic worldview. A long-time conservative economist and former chair of the White House Council of Economic Advisers, Hassett currently heads the National Economic Council. He’s been a vocal defender of Trump’s policies, often downplaying data that hint at economic weakness and echoing the President’s critiques of federal agencies. Despite his loyalty, some within the administration question whether Hassett possesses the gravitas to command the respect of other Fed policymakers. As BBC News reports, Deutsche Bank economists have warned that Hassett “might struggle, at least initially, to convince other policymakers to put aside concerns about inflation and cut rates meaningfully.” In a recent CNBC interview, Hassett tried to allay fears about his independence, stating, “The Fed’s independence is really, really important,” while reiterating that “interest rates still had room to fall.”
Kevin Warsh, 55, brings a different profile. A former Fed governor and current fellow at the Hoover Institution, Warsh is known for his hawkish stance during his time at the central bank—favoring higher rates and a focus on inflation. Yet, in recent months, Warsh has pivoted, arguing for a reduction in the Fed’s balance sheet to bring down short-term rates. Trump, speaking to The Wall Street Journal, praised Warsh: “I think the two Kevins are great.” Warsh’s family ties—his father-in-law Ronald Lauder is a prominent Trump ally—have also fueled speculation about his chances. Still, some experts question the logic of Warsh’s policy prescriptions, especially his belief that shrinking the balance sheet will lower rates.
Christopher Waller, 66, is the institutional candidate. Appointed to the Fed by Trump in 2020, Waller recently sat down for an interview with the President, a move that boosted his standing in prediction markets. Waller lacks the personal connections that have buoyed Hassett and Warsh, but his reputation as a steady, pragmatic policymaker has won him fans on Wall Street. “He’s a man who’s been there a long time,” Trump said after their meeting. Some analysts, like Skyler Weinand of Regan Capital, see Waller as “the more sensible choice.” Selecting Waller could also give Trump the opportunity to fill two Fed board seats in 2026, further cementing his influence over the central bank.
Other names have been floated, including BlackRock executive Rick Reider and Treasury Secretary Scott Bessent, but the consensus is that the next Chair will come from the trio of Hassett, Warsh, and Waller.
Trump’s intervention has not gone unnoticed by financial markets. After the President’s Truth Social post, Treasury yields rose as traders weighed the prospect of a more compliant Fed Chair. Samuel Fuller, Director at Financial Markets Online, noted, “The data has one big sting in the tail for the president and those calling for further interest rate cuts. The US Federal Reserve has cut rates three times in a row in recent months, but the combination of stubborn inflation and resilient growth will likely take any further cuts off the table for the start of 2026, and this is weighing on US equities as we head into the holidays.”
Despite the celebratory tone in the White House, analysts warn of potential trouble ahead. Consumer confidence has slumped, and there are fears that the economy could face a rocky start to 2026, with the risk of widespread job losses and the possibility of rate hikes rather than cuts. The President, however, remains undaunted. “We are going to be encouraging the Good Market to get better, rather than make it impossible for it to do so,” Trump posted. “We are going to see numbers that are far more natural, and far better, than they have ever been before. We are going to, MAKE AMERICA GREAT AGAIN! The United States should be rewarded for SUCCESS, not brought down by it.”
As the search for the next Fed Chair draws to a close, one thing is certain: whoever is chosen will face a daunting task—balancing the President’s demands, the Fed’s tradition of independence, and the relentless scrutiny of both markets and Main Street. The outcome will shape American monetary policy for years to come.
